The original budget was set at 15,000 units and estimated variable overheads at $345,000 ($23 per unit). If actual output is 16,000 units, calculate the variable overhead total and unit cost that would be shown in a budgeted flexed to actual output.

Question

Quizplus · Accepted Answer

The variable overhead cost per unit remains constant at $23. When the output increases to 16,000 units, the total variable overheads would be 16,000 units * $23/unit = $368,000. The unit cost does not change with the increase in output, remaining at $23.

The Original Budget Was Set at 15,000 Units and Estimated